Sounding Board: Health Outcomes and Personal Choice Collide

by | Apr 11, 2017 | Business Owners, Employee Engagement, Government Benefits, Group Benefits, Health and Wellness, Prescription Drugs

A Quebec employer recently boasted about its unconventional hiring policy – the company has never hired a “smoker” in its 30 years as a business, and its proud of this stance. News like this is mildly shocking in Canada, where the idea of health outcomes, personal choices and hiring practices have little correlation to one another.

The truth is this scenario may be a harbinger of things to come.

In the United States, with its strong sense of individuality, the very notion of personal choice and healthcare are closely tied to one another.

Take, for example, U.S. pharmacy chain CVS’s controversial move in 2013, demanding that all employees involved in its healthcare plans turn over personal statistics on weight, body fat and other health information or pay a penalty.

The drive behind this directive? Pure cost reduction of course, as CVS defended its policy by saying “[our] benefits program is evolving to help our colleagues take more responsibility for improving their health and managing health-associated costs…”

Vilified as it was, CVS is not the only employer implementing these types of stipulations for its wellness programs. Almost 35% of U.S.-based employers have some form of wellness criteria that employees must meet in order to receive full benefits under their company-sponsored health plan.

Major organizations all over the U.S. have taken very serious steps to manage the high price of healthcare associated with unhealthy lifestyle choices. In fact, as a part of “Obamacare’s” Affordable Care Act, 2014, employers can actually charge an extra 30% of the total cost (employer and employee portions) of individual or family health benefits coverage under a section called Wellness Exception to HIPAA Nondiscrimination Provisions, which “allows premium discounts or rebates or modification to otherwise applicable cost sharing (including copayments, deductibles or coinsurance) in return for adherence to certain programs of health promotion and disease prevention.”

The takeaway here should not be the wiping of our collective brows in relief that it’s not happening in Canada, but instead, how will we be prepared when it does? Although legal experts may not be wrong in labelling the Quebec employer’s “non-smoker” hiring practices discriminatory, at its core, it’s about personal choice, preventable diseases and the higher health costs associated with treatment.

In Canada, the cost to employers of private insurance plans is still masked by our provincial healthcare systems. The small cost of maintenance drugs for disease states, such as cholesterol, high blood pressure and even type 2 diabetes, hides the real issue: rates of preventable disease are on the rise, and are increasing at a frightening trajectory.

The cost is not simply for drugs. Cardiovascular disease had a total spend in 2014 of more than $20.9 billion on physician’s services, hospital costs, lost wages and decreased productivity. And one of the fastest growing preventable diseases, type 2 diabetes, is estimated to have cost Canadians $6 billion in 2015 and accounts for 30% of heart attacks, 30% of strokes, 50% of kidney failure, according to a report by the Canadian Diabetes Association.

So, in a private-payer scenario, who should assume responsibility for these escalating costs? There are really only two options: employers or employees.

Employers are quickly realizing the lasting impact of chronic diseases, not only in the increased premiums of their benefits plan, but to their bottom line through lost productivity. And employees are becoming more aware of increased costs through higher coinsurance, deductibles and drug maximums, as their organizations try to reduce the overall spend on the benefits plan. The outcome is that neither group is satisfied, but the options today are limited, unless we want to challenge the very Canadian notion of universal access to healthcare.

Fortunately for Canadians, much of the premiums paid by employers in the U.S. are covered by our provincial healthcare systems, and because of this it seems to shift the discussion away from these increasingly worrying trends, but that conversation may not be far off.

It is simply a matter of time before the combination of our aging population, escalating costs of our health infrastructure and decreasing tax base brings this issue to the forefront of the employee benefits marketplace.

Kathleen O’Keefe | March 4, 2016

Kathleen O’Keefe is president of Crillion Benefits Advisory Group, a member of the Benefits Alliance Group.